If the merger of two companies fails, something similar happens to what happens after a couple marries: partners who wanted to marry turn to the culprit. Opponents who never wanted the merger can breathe a sigh of relief. And some guests hope that the partners will meet again later. That there is still something to celebrate.
All this is found in the case of Vonovia: the largest German real estate group wanted to buy Deutsche Wohnen, the largest private owner in Berlin, for a good 18 billion euros. Together, they both wanted to form the leading real estate group in Europe, with 560,000 apartments in Germany, Sweden and Austria.
But nothing will come of it for the moment, as Vonovia finally admits: the group has collected just under 48% of the shares of Deutsche Wohnen. Both companies had set a minimum of 50 percent. Vonovia had already failed the markets on Friday with preliminary figures.
The German Tenants Association is now one of the relaxed. “A merger would not have helped tenants at all,” said President Lukas Siebenkotten. “We don’t see any benefit in getting bigger and bigger housing groups. “
In the search for the culprit, Vonovia names two suspects at the same time: On the one hand, the hedge funds bought a considerable part of the shares of Deutsche Wohnen. They apparently speculated that they might get a higher price per share in a subsequent starting bid. They therefore did not sell their shares initially. On the other hand, ETFs have a stake of around 20% in Deutsche Wohnen. These passive funds follow indices like the Dax. They only react to a takeover offer when a company like Deutsche Wohnen has to leave an index like Dax. ETFs were therefore also unable to accept Vonovia’s offer.
Deutsche Wohnen stock temporarily rose above the price Vonovia had offered on Monday
The Deutsche Wohnen share price shows how much investors are still hoping for a happy ending. It was listed Monday at times just above the 52 euros that Vonovia had offered per share.
This is because Vonovia says it wants to “carefully consider” possible options, including a renewed offer. In fact, the law states that a bidder like Vonovia would have to wait a year before making a new offer – unless the board of directors of Deutsche Wohnen accepts again. Vonovia has already bought a good 18 percent of the shares of Deutsche Wohnen. Consequently, the group evokes other options: it could either sell this participation, or increase it.
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Press conference with Berlin Mayor Michael Müller (left to right), Vonovia boss Rolf Buch, Deutsche Wohnen boss Michael Zahn and Finance Senator Matthias Kollatz: The companies offered concessions to the state of Berlin.
(Photo: Christoph Soeder / dpa)
“A merger of the two companies makes a lot of economic and socio-political sense,” said Vonovia boss Rolf Buch, even after the bid failed. Companies are announcing billions of upcoming investments in new construction and adding floors to residential buildings, but also in renovations and new energy systems for a climate-friendly future.
In addition, political pressure on large, prosperous landowners increased, especially in Berlin. The country had initially tried unsuccessfully to stem the rise in housing prices with a ceiling on rents. In the meantime, an initiative has collected enough signatures for the city’s population to vote in September on the proposal to expropriate the large private landowners of the capital. The biggest enemy here is the Deutsche Wohnen group, 70% of which is in Berlin. Vonovia is more widely positioned, with tens of thousands of apartments each in the Ruhr area, the Rhineland and Dresden.
Investors still hope that these portfolios will come together. “Vonovia should try again,” comments Kai Klose, analyst at Berenberg private bank. From the group’s perspective, the requirement has only one downside: “Clearly, a new, higher bid should be submitted for this,” Klose said. It would be exactly the case that many of the party guests were hoping for.